Dodgers file for Chapter 11 protection; MLB will challenge it

Representatives for Dodgers owner Frank McCourt will try to convince a bankruptcy court judge in Delaware today to give him protection under Chapter 11, the latest act of desperation to buy more time to stave off Major League Baseball's attempt to seize control of the franchise.

McCourt's lawyers filed the 100-page bankruptcy document early Monday to start the process, four days before missing a June 30 team payroll. He says in court papers that he has secured $150 million from a New York investment management company, Highbridge Principle Strategies, for interim financing that would allow him to meet Thursday's deadline.

This also comes a week after MLB Commissioner Bud Selig denied a joint request by Frank and Jamie McCourt to approve a media rights deal with Fox Sports that could have infused the team with millions of dollars immediately and a reported billions of dollars long term.

Frank McCourt contends in the bankruptcy documents that his goal is to negotiate a new media deal within 180 days, which would allow him to pay all his creditors in full.

Several sources have said the Dodger players will be paid as scheduled on Thursday, no matter how this ruling falls.

"There will be no disruption to the Dodgers' day-to-day business, the baseball team, or to the Dodger fans," the team said in a statement.

Selig said in a statement that McCourt's filing "does nothing but inflict further harm to this historic franchise."

The MLB will contest McCourt's bankruptcy filing at today's hearing. Last year, the Texas Rangers sought Chapter 11 protection, leading to the auctioning off of the team.

Selig said his goal "from the outset has been to ensure that the Dodgers are being operated properly now and will be guided appropriately in the future for their millions of fans. To date, the ideas and proposals that I have been asked to consider have not been consistent with the best interests of baseball."

McCourt reiterated in a statement that Selig has "turned his back on the Dodgers, treated us differently and forced us to the point we find ourselves in today. I simply cannot allow the Commissioner to knowingly and intentionally be in a position to expose the Dodgers to financial risk any longer.

"It is my hope that the Chapter 11 process will create a fair and constructive environment to get done what we couldn't achieve with the commissioner directly."

Team vice chair Jeff Ingram wrote in the bankruptcy request that "a perfect storm of events" has led to McCourt's need to take this action, including nearly $22 million a year in deferred payments to players.

In having to list the top 40 creditors due payments, McCourt could only include six current players. The top two - Manny Ramirez and Andruw Jones - are former players with hefty deferred salaries.

Ramirez, who played for the Dodgers from 2008-2010, is due nearly $21 million, the documents say. Jones, who in his only season, 2008, hit just three homers and batted .158 in 75 games, is owed $11 million.

Among those listed include Dodgers Hall of Fame broadcaster Vin Scully, due $152,778.

The City of Los Angeles is also owed $240,563 in tax debt.

Controller Wendy Greuel said she will try to make sure the city takes action to ensure payment of the debt.

"As a lifelong Dodger fan, I've always wanted to be in the same company as Vin Scully," Greuel said. "I just never thought it would be in a bankruptcy filing."

More importantly, she said, is to make sure the city is paid what it is owed.

"This translates into hiring more police officers or running more after-school programs," Greuel said. "In these tough economic times, we need to get every dollar we are owed."

David Carter, the executive director of USC Sports Business Institute, compared the legal wrangling Monday between McCourt and Selig to a "high stakes chess game, and the MLB has been taking pieces off the board at each move. Frank's best case is if both sides are stuck only with a king - and if that's the case, we know which king will prevail.

"But for some reason, Frank wants to play this thing out and embarrass everyone along the way."

A statement released by the lawyers of McCourt's ex-wife, Jamie, who contends she still owns half the franchise under California community property rules, called the bankruptcy filing both "disappointing and disturbing."

Attorney David Boies of Hiltzik Strategies said that when Jamie McCourt was CEO of the Dodgers, the team's financial condition, while heavily leveraged, was stable and improving. In the two years since she was fired by Frank McCourt, Boies said Jamie has made repeated proposals to resolve her right to half of the team in a way that would preserve the value and integrity of the Dodgers for fans and the city.

"She has continued to do so despite the many personal attacks against her by Mr. McCourt and his representatives...

The bankruptcy filing most likely means that the nearly two-year divorce battle between Frank and Jamie McCourt is no closer to being resolved soon.

Stanley Stalford, chairman of a potential citizens ownership group called Own The Dodgers LLC, said that the bankruptcy filing was "the wrong choice for the team."

"Given the choice of being a gentleman or looking out for his own interests, Frank McCourt shows he is concerned only with his self-interests," Stalford said. "In the short term, this is tragic for the team and its fans, a public humiliation, as if we haven't been embarrassed enough by McCourt. However, in the long term he gives us more time to develop our plans and build public support."

Stalford said nearly 10,000 people have signed up for information on the website, ownthedodgers.com. He and other supporters plan to meet with attorneys to determine what their next legal steps will be.

Aides to Mayor Antonio Villaraigosa said he had no comment on the filing.

However, Councilwoman Janice Hahn, whose father Jim helped bring the franchise to L.A. from Brooklyn in the late 1950s, called it "a sad day in the history of the Dodgers," and she asked that the city study the potential public ownership of the team.

"We need to return our beloved team to first place in the standings, in the hearts of the community and on the balance sheet," Hahn said.

"If this bankruptcy leads to the sale of the team, my hope continues to be that the fans will be allowed to make an offer to purchase the team."